(Yicai) Oct. 17 -- Baoshan Iron & Steel and China Railway Construction are among a slew of China-listed businesses to set out share buyback plans after a Chinese sovereign wealth fund last week raised its stakes in state banks for the first time in eight years to boost stock market confidence.

Baoshan Iron & Steel, the listed arm of the world’s largest steel producer China Baowu Steel Group, said yesterday that the company will use its own funds over the next 12 months to repurchase shares worth no more than 2.25 percent of the total or up to CNY3 billion (USD410.2 million).

On the same day, China Three Gorges Renewables Group, China Railway Construction, China Coal Energy, Hikvision Digital Technology, and China Resources Microelectronics said major stockholders will boost their stakes by CNY100 million to CNY600 million (USD13.7 million to USD82 million). 

Buybacks can boost shareholder value by increasing earnings per share and signal confidence in a company's stock, among other advantages.

The buybacks announced come after Central Huijin upped its holding in four of the country’s biggest banks on Oct. 11, namely Industrial and Commercial Bank of China, Agricultural Bank of China, Bank of China, and China Construction Bank, adding 0.01 percent of each and saying that it will buy more over the next six months. The last time it bought shares in Chinese state banks was August 2015.

Following Central Huijin’s move, the benchmark Shanghai Composite Index rose by 0.9 percent to 3,107.9 points on Oct. 12, but has declined in subsequent days. It ended today 0.3 percent higher at 3,081.75.

China Petroleum & Chemical, known as Sinopec, also disclosed yesterday that it has spent CNY267 million since Sept. 21 to repurchase 44.7 million of its A-shares or 0.04 percent of the total outstanding. In late August, the petrochemical giant announced it would buy back shares worth up to CNY1.5 billion over the following three months.

Central Huijin dipped into the market six times between 2008 and 2015, per data disclosed by US investment bank Goldman Sachs. In the three following months, the average gains of the CSI 300 Index and the MSCI China Index were 4 percent and 8 percent, respectively. Stocks in sectors such as banks, insurance, and real estate led the turnaround.

Editors: Dou Shicong, Emmi Laine